Why does the public sector use an IT procurement approach that has a long history of failure? Presumably the reason is that the public sector has yet to be offered a better solution. Given the high failure rates of IT procurement, you would think that the public sector would be desperately trying anything to improve the situation. Yet we don’t see this. So the process continues to be used, failure continues to be the result, and the same big companies that failed to deliver in the past are rewarded with new opportunities for failure in the future.

The standard IT procurement approach used by the public sector is consolidated procurement.
In the consolidated procurement approach, a large project is bid out to a small number of vendors, often a single, large vendor. I call this model consolidated procurement because a large body of work is consolidated into one, or, at most, a small number of vendors.

There are three fundamental problems with consolidated procurement.

1. It has poor success rates, which hurts the public sector.
2. It costs too much, which hurts the taxpayers.
3. It excludes small business, which hurts the economy.

This briefing paper introduces an procurement approach that I call partitioned procurement. Partitioned procurement is a new approach specifically for procuring large IT systems (systems of $5M or more.) In partitioned procurement, a large project is partitioned into small (approximately $1M) projects.
Partitioned procurement benefits to public sector organizations in a host of ways including:

1. It improves project success rates, which helps the public sector be more effective.
2. It reduces project cost, which benefits the taxpayers.
3. It invites small business, which stimulates the economy.

While this paper is directed at the public sector, many of the issues are relevant to the private sector as well. The private sector has long been able to conceal its failures, but they occur with the same frequency of public sector failures.
 

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